Buying Makes Sense in These 66 Metros

It’s more affordable to buy than to rent in many U.S. markets, according to data compiled by the National Low Income Housing Coalition.

Of the 100 most populous metro areas, 57 have average three-bedroom rental costs higher than the cost of a 6-percent interest rate loan for a typical low-priced house, the coalition said in a just-released report. That means people renting two-bedroom apartments would be better off buying a low-priced home in 24 of the 100 largest metro areas.

However, when determining if it’s better to buy or rent, credit history is a crucial component to consider. A prospective buyer who is credit worthy of a 6 percent mortgage will pay a third less in monthly payments than someone who qualifies for an 8 percent loan.

And in many cities that can be a difference of hundreds of dollars and push them over the line to where renting actually makes more sense.

These are the top 10 markets where it makes sense to buy rather than rent. The full list of 66 markets is available at MSN.com.

  1. McAllen-Edinburg-Mission, Texas
  2. San Antonio, Texas
  3. New Orleans-Metairie-Kenner, La.
  4. Houston-Sugar Land-Baytown, Texas
  5. Dallas-Fort Worth-Arlington, Texas
  6. Rochester, N.Y.
  7. Syracuse, N.Y.
  8. Buffalo-Niagara Falls, N.Y.
  9. Jackson, Miss.
  10. Austin-Round Rock, Texas

Source: MSN Real Estate, Marilyn Lewis

Rent-to-Own Gaining Favor Once Again

Rent-to-own options are becoming popular again after falling out of favor during the last couple of decades when mortgages were easy to get.

The advantages of rent-to-own to buyers include a way around poor credit, an opportunity to rebuild credit worthiness and a way to try out homeownership without making a costly commitment.

For sellers, it offers cash flow from properties that might otherwise just be sitting there.

In some parts of the country, like Florida, rent-to-own arrangements are fairly commonplace, but in other parts of the country developers are only beginning to experiment with this form of purchase.

In the Boston area, Economic Development Financing Corp. (EDFC) and Trinity Financial are two affordable-home developers that have introduced experimental rent-to-own programs. Eric Gedstad, spokesman for MassHousing, a state agency that finances housing construction, says his agency is supportive.

“As the lender, we are gratified that the developer has cash coming in. It makes sense for potential homeowners. The more time that goes by the better the opportunity for someone to repair his credit.”

Source: Boston Globe, Robert Preer

FICO Scoring System Gets Redesign

Fair Isaac Corp., the company that devised the ubiquitous FICO credit scores, announced this week that it plans to roll out a suite of tools designed to predict future default risk.

Fair Isaac says the new products will predict how lenders can offer even more debt to consumers without taking on undue risk.

The update revamps the old credit-scoring formula so that it penalizes consumers with a high debt load more than the earlier version. FICO 08 should increase predictive strength by 5 to 15 percent, according to Fair Isaac’s vice president of scoring, Tom Quinn.

FICO 08 is also expected to do a better job of determining which consumers with past defaults are “more on the road to recovery and should have more of a higher score,” Quinn says.

The new index can look at three consumers with a 700 FICO score and determine which of the three could take on additional debt without defaulting, according to the company.

Source: Star-Tribune, Kara McGuire (01/22/08)

Did you know..

There are a number of State, City and Non profit programs available to help with down payment assistance?

There are a number of State, City and Non profit programs available to help those with challenged credit, to get you into a home within 90days or less?

There are a number of programs  available just for those wanting to live within the city? For those with low-mid income  wanting to live in neighborhoods such as the West End or Westview?

If you didn’t know- you better ask. I’ll gladly direct you to a few mortgage specialist that are approved for many of these programs, who will work with you in finding the right one for you!

Advice to Buyers: Spend Cautiously Before Closing

Daily Real Estate News | November 12, 2007
Home buyers should take care not to run up a lot of debt between the time they are approved for a mortgage and the day they go to the closing table.

Many lenders are pulling credit history and credit scores within a week of a buyer’s scheduled closing date just to make sure nothing major has changed. What the lender doesn’t want to see is a huge run-up of credit-card debt or other loans.

The lender also may require the borrower to sign a statement at closing affirming that there has been no change in the borrower’s financial ability to repay the loan and that the borrower’s employment status remains the same.

Home buyers should be particularly cautious not to throw their debt ratio out of whack by buying things for the new home before they own it because the added debt might change their credit score and the lender may no longer be willing to lend them money at the rate promised, or maybe not at all.

The best advice, experts say, is to wait to do that shopping until after closing.

Source: Ilyce Glink, Real Estate Matters Syndicate (11/09/2007)